Question

Sonam keeps his books on single entry and provides you with the following information:

	31-12-2006 ₹	31-12-2007 ₹
Furniture and Fitting	50,000	60,000
Stock	30,000	10,000
Sundry Debtors	60,000	70,000
Sundry Creditors	20,000	NIL
Prepaid Expenses	NIL	2,000
Outstanding Expenses	6,000	10,000
Cash in hand	11,000	3,000
Recipts and Payments in 2007:
Receipts from Debtors		2,10,000
Paid to Creditors		1,00,000
Cartage		20,000
Drawings		1,20,000
Sundry Expenses		1,60,000
Furniture Purchased for Cash		10,000

Prepare Trading and Profit & Loss Account for the year ended 31 December, 2007 after providing for bad debts at 10%.
There was a considerable amount of Cash Sales.

Answer 1

Trading Account for the year ended March 31, 2007
Dr.			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Opening Stock	30,000	Sales (Cash + Credit)	4,12,000
Purchases (Credit)	80,000	Closing Stock	10,000
Cartage	20,000
Gross Profit	2,92,000
	4,13,000		4,13,000

Profit & Loss Account for the year ended March 31, 2007
Dr.			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Sundry Expenses	1,60,000	Gross Profit	2,92,000
Provision for Bad Debts	7,000	Prepaid Expenses	2,000
Outstanding Expenses	4,000
Net Profit	1,23,000
	2,94,000		2,94,000

Balance Sheet as on March 31, 2007
Dr.				Cr.
Liabilities		Amount (₹)	Assets	Amount (₹)
Capital	1,25,000		Furniture & Fittings	60,000
Less: Drawings	1,20,000		Stock	10,000
Add: Net Profit	1,23,000	1,28,000	Debtors (70,000 – 7,000)	63,000
Outstanding Expenses		10,000	Prepaid Expenses	2,000
			Cash in hand	3,000
		1,38,000		1,38,000

Working Notes:

Balance Sheet as on March 31, 2006
Dr.			Cr.
Liabilities	Amount (₹)	Assets	Amount (₹)
Creditors	20,000	Furniture & Fittings	50,000
Outstanding Expenses	6,000	Stock	30,000
Capital (Balancing figure)	1,25,000	Debtors	60,000
		Cash in hand	11,000
	1,51,000		1,51,000

Cash Account
Dr.			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Balance b/d	11,000	Creditors A/c	1,00,000
Debtors A/c	2,10,000	Cartage A/c	20,000
Sales A/c (Balancing Figure)	1,92,000	Drawings A/c	1,20,000
		Sundry Expenses A/c	1,60,000
		Furniture A/c	10,000
		Balance c/d	3,000
	4,13,000		4,13,000

Debtors Account
Dr.			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Balance b/d	60,000	Cash A/c	2,10,000
Sales A/c	2,20,000	Balance c/d	70,000
	2,80,000		2,80,000

Creditors Account
Dr.			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Cash A/c	1,00,000	Balance b/d	20,000
		Purchases A/c	80,000
	1,00,000		1,00,000